The failure to provide a personal hearing before an adverse decision violates principles of natural justice as mandated by the Goods and Services Tax Act.

JUDGMENT :

1. This petition has been filed by the petitioner aggrieved of the order dated 04.02.2025 passed by Joint Commissioner, SGST, Corporate Circle -1, Ghaziabad (Annexure-1) under Section 74 of Goods and Services Tax Act, 2017 (for short, ‘the Act’) wherein, a demand of Rs. 5,82,67,589.12/- has been created.

2. It is inter alia indicated in the petition that the petitioner is engaged in manufacture and supply of potato flakes besides other items. A show cause notice dated 03.08.2024 for the period July 2017 to March 2018, proposing to classify the product in question i.e. potato flakes under tariff heading 2005-2000 instead of 1105-2000 was issued. In the notice, date by which the reply was required to be submitted was indicated as 19.08.2024 and in column pertaining to date of personal hearing ‘NA’ was indicated and the same was the position pertaining to column pertaining to time of personal hearing.

3. A reply to the notice dated 03.08.2024 was filed by the petitioner through counsel on 19.08.2024 contesting the allegations made therein. In the reply, a specific prayer was made on behalf of the petitioner that no adverse order to the prejudice of the petitioner be passed without affording him an opportunity of hearing.

4. However, by the order impugned dated 04.02.2025, without affording any opportunity of hearing, the demand has been created.

5. It is submitted by learned counsel for the petitioner that the action of the respondents in passing the order impugned, without affording any opportunity of hearing to the petitioner is ex-facie contrary to the provisions of Section 75(4) of the Act. It was emphasized that the section which pertains to general provisions relating to determination of tax under sub-Section (4) clearly provides that an opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.

6. Despite the mandatory requirement of law, the show cause notice in the column pertaining to the date of personal hearing indicated ‘NA’ and despite specific prayer made in response to the show cause notice for providing personal hearing, no opportunity of personal hearing was provided which action besides being contrary to the provisions of the Act, is contrary to the Circular dated 13.06.2024 issued by the Additional Commissioner Law, Commercial Tax, U.P. specifically referring to the judgement of this Court in the case of Laskin Engineering Pvt. Ltd. Vs. State of U.P. and Another : Writ Tax No. 674 of 2024, decided on 16.05.2024. The respondent has indulged in violation of provisions of law as well as the directions given by this Court and the State and, therefore, the order impugned deserves to be quashed and set aside.

7. Learned Standing Counsel has produced instructions wherein comments have been offered on the merit of the dispute and not a word has been indicated as to why the mandatory provisions of Section 75(4) of the Act have not been complied with.

8. This Court in the case of Laskin Engineering Pvt. Ltd. (supra) inter alia observed and directed as under:

“5. It is basic to procedural law under taxing statutes that opportunity of personal hearing must be provided to an assessee before any assessment/adjudication order is passed against him. Thus, we find it strange and wholly unacceptable merely because the substantive law has changed, the revenue authorities have changed their approach and are failing to observe that mandatory requirement of procedural law. They have thus denied o